In a recent column, novelist Orson Scott Card once again tries to take on economics. A few years ago, I wrote about another attempt of Card’s to compare economics with religion, but this time, instead of just making fun of the people who actually know something about economics, he gets more specific about his own views — in part, a high-school-civics notion of good-government regulation and a laughable invocation of the labor theory of value. This latter actually seems to be the basis for most of his other mistaken (or just really sloppy) economic ideas.

After listing many of the ways in which he believes government regulation protects us from the “cruelty” of markets, Card writes:

Money is a way of storing and transferring labor. When one person makes a million dollars and another person makes twenty-five thousand, you can count on it that the guy making a million did not work forty times harder or contribute work worth forty times more to society as a whole.

Of all the factors that contribute to the value of a good or service, the amount of labor involved is pretty much irrelevent — the amount people are willing to pay you isn’t contingent on how much you sweat, but on how much the things you produce are worth to the people who want to buy them.

When it comes right down to it, the only way to increase the value of labor is to increase the amount spent on capital — which is the role of capitalists. Labor productivity increases when the laborers have better training and use better tools. The capitalist invests in training and tools and receives some of the benefit of his investment; the workers receive the rest. So Marx’s idea that capitalists make their money by expropriating part of the value of the efforts of their laborers is pretty much the opposite of the truth. Laborers make a large part of their wages by expropriating part of the value of the capitalist’s investment in training and tools — without the capitalist’s investment in productivity, their labor wouldn’t be worth much.

Here’s another way of looking at it. In order for labor to be worth much, workers need access to tools and training. Where do the tools and training come from? Well, they could pool their money together to buy their own factories and to develop efficient standards and procedures of their own. But this is a pretty big risk. If, despite their investment, their business turns out not to be profitable, a whole bunch of people have lost what little they had. So instead of risking everything they own on a venture that might not pan out, they find someone with money to spare (yes, that would be a rich person) — a capitalist who has invested in a factory of his own. The capitalist’s profit, then, isn’t a skim off the “value” of the workers’ labor, but akin to a rental fee, paid by workers who are borrowing use of the capitalist’s tools and training in order to make their own labor more valuable.

Also pretty ricidulous are Card’s ideas about antitrust:

When the same person tells you that deregulation is good and anti-trust laws are bad, he is not a supporter of the free market, he is a supporter of people getting rich at the public expense.

AT&T was a huge monopoly that people believed to be essential to the public good. But when AT&T was broken up, the result was vast improvement in service and an increase in profits. (Now, of course, the FCC has introduced telecom industry “deregulations” that are actually maddeningly harmful new regulations in disguise — but that’s another issue.)

If you want to know what America would look like without anti-trust protection, you have only to look back at the old Soviet Union. The USSR never had communism, though it was ruled by the Communist Party. The actual economic system was state-owned monopoly. It was as if Microsoft ran every business. Which is, of course, what Microsoft would attempt to do if the government didn’t block it.

It almost seems too obvious to point out that AT&T and the Soviet Union are both examples of government-created monopoly. Concentrations of power like this just don’t happen without centralized authoriatarian control. And Microsoft isn’t a “monopoly” akin to AT&T or Standard Oil or any other government-created monoliths by any stretch of the imagination. It has to constantly scramble to beat the innovations of its competitors if it wants to stay on top. It may be dominant now, but it has no sure hold on power without something like a government to squash its competitors decisively.

The primary objection to Microsoft seems to be that because of its dominance, consumers have lost out on the innovation that others might have produced in a tougher competitive market. But it’s a misnomer to call a loss of innovation a “market failure” — it expresses a value judgment that the innovation we may have had is somehow better than what consumers have chosen. And while economics should study what might have been, under different circumstances, it should remain free of value judgments that the alternatives would have been better or worse than what is. It begs the question: better according to whom? Preference is subjective. “De gustibus non disputandum est” — diff’rent strokes for diff’rent folks.

It’s entirely possible — even probable — that if Microsoft hadn’t gained such a large market share, we would have, by today, developed a more stable, popular, widely compatible, user-friendly operating system than Windows. But this doesn’t make Microsoft’s dominance a “market failure” at all, because it ignores what consumers got in return for a trade-off in quality: immediacy.

By using Microsoft products, people were able to use the same programs, file types and operating systems as most other people, in a user-friendly environment, in the here and now — instead of putting off present productivity to wait for a future when an independent standard for competing, increasingly better, products arose. In essence, any loss of innovation caused by Microsoft’s dominance is like interest payments on a loan — you get something you can use right now, but it takes awhile to pay off the resultant opportunity costs (much like the capitalist’s factory, above). This is a perfectly rational trade-off, and doesn’t warrant a value judgment on the part of economists (or the Department of Justice) who think they know better what consumers should want.

(And buying Microsoft products because you’ve been enticed by a successful marketing campaign isn’t irrational either. As Steven Landsburg pointed out in The Armchair Economist, high-dollar ad campaigns (like those featuring Michael Jordan, or those using expensive Rolling Stones songs) are akin to companies who publicly buy large bonds that they can’t cash in unless the company is still around in a few years. It’s a demonstration that the company has faith in its own products and intends to be around to support them for the forseeable future. It’s no “market failure” when people use products that are featured in expensive advertising campaigns, even if there are technically better products available. Support and consistency are factors that people rationally include in their estimation of the products they decide to use.)

It seems likely that Microsoft’s dominance will begin to fade over the next decade or so, as innovation begins to catch up. And it’s a change I welcome — when Linux can support a similar range of consumer software to the range that Windows currently supports, I’ll switch my OS in a heartbeat. Until then, I prefer to maintain my current productivity at the expense of increased innovation. Bad choice, you say? Too bad . . .

So it’s pretty inarguable, I’d say, that we’ve lost some measure of innovation due to Microsoft’s dominance, and in return gained a more immediate degree of increased productivity. But it’s also inarguable that if consumers had rejected Microsoft’s advances and instead waited for an industrywide competitive standard, we would have gained some measure of innovation but lost out on a measure of immediate productivity. Which choice is better? I’m not entirely sure, but it’s a choice I’d rather leave to consumers than to economists and politicians. Or to Orson Scott Card.